Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 03-Oct-2024 19:03:05 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 8275 of 2024 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). Sunanda Parida …. Petitioner(s) -versus- Chief Manager, Reserve Bank of India and Ors. …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: : For Petitioner(s) Ms. Mitalee Jesthi, Adv. For Opposite Party (s) : Mr. Subrat Misra, Adv. CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-20.08.2024 DATE OF JUDGMENT: -24.09.2024 Dr. S.K. Panigrahi, J. 1. The Petitioner, through this Writ Petition, seeks to challenge the inaction of the Opp. Party No. 3 in not releasing the original mortgaged title deeds of the Petitioner despite closure of the Loan Account bearing Account No. 8014774000062 on 09.02.2022 upon payment of the full outstanding dues alleging that it is illegal, arbitrary, malafide as well as contrary to the well-settled principles of law. I. FACTUAL MATRIX OF THE CASE:
Legal Reasoning
2. The brief facts of the case as narrated by the Petitioner: Page 1 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 03-Oct-2024 19:03:05 (i) On 24.06.2011, the Petitioner had availed Housing Loan of Rs. 9,00,000/- (Rupees Nine Lakh Only) (hereinafter “Housing Loan”) from the Opp. Party No. 3 for the construction of her sole Residential House. Further, the said loan was sanctioned bearing Loan Account No. 8014774000062 for a duration of 10 years, i.e., starting from 24.06.2011 and to be repaid in 10 years with 181 EMIS. (ii) In the meantime, the Petitioner had undertaken financing to start her business of providing bus services to daily commuters and passengers. In August 2005, the Petitioner purchased Vehicle bearing Registration No. OR- 17D-5500 (“Vehicle No. 1”) financed under Citi Corp Finance Sambalpur. Further, the Petitioner re-financed Vehicle No. 1 for an amount of Rs. 2,50,000/- (Rupees Two Lakhs Fifty Thousand Only) from Cholamandalam Finance, which stood re-paid with no incident of default on part of the Petitioner. Further, in April 2008, the Petitioner purchased another vehicle bearing Registration No. OR-17F-2700 (“Vehicle No. 2") under Citi Corp Finance Sambalpur. Subsequently/ the Vehicle No. 2 was re-financed from Syndicate Bank, Bargarh (now "Canara Bank, Bargarh" owing to Bank Merger). The said loan too stood re-paid with no instance of default. Lastly, on 20.08.2016, the Petitioner purchased a Night Coach Bus of Make:- TATA-LPO-1618TL/62- BS-III- ABS ("Requisite Make") bearing Registration No. OD-17J-5005 ("Vehicle No. 3") under Micro-Small- Medium Enterprises Loan ("MSME Loan") from Syndicate Bank (now "Canara Bank, Bargarh" owing to Bank Merger) for an amount of Rs. 30,00,000/- (Rupees Thirty Lakhs Only), scheduled to be re-paid in 78 EMIs of Rs. 56,752/- (Rupees Fifty-Six Page 2 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 03-Oct-2024 19:03:05 Thousand Six Hundred seventy two only) each with a moratorium granted for a duration of 6 months from the date the loan was availed. (iii) The Petitioner was unable to continue repayment towards the Housing Loan owing to sudden breakout of the COVID-19 pandemic. The Petitioner, a business-owner providing bus services for daily commuters and passengers was caught unawares when the entire State entered lockdown, found herself amidst the escalating pandemic fallout that led to the complete halt of her business operations. (iv) With the waning of the pandemic, the Petitioner immediately tried to close the Housing Loan. On 09.02.2022, the Petitioner paid the full outstanding amount and closed the Loan Account No. 8014774000062. The same has been endorsed by the Opp. Party No. 3 on the Statement of Account dated 10.02.2022. (v) After closure of the Housing Loan, the Petitioner sought for the return of the original mortgaged title deeds of the sole Residential House. However, the Opp. Party No. 3 intimated that the original mortgaged title deeds cannot be returned as the same has been kept as subsequent equitable mortgage to the MSME Loan availed for purchasing Vehicle No.3. The Opp. Party No. 3 did not return the original mortgaged title deeds of the Petitioner, rather rebutted the ask of the Petitioner stating that the Petitioner’s sole Residential House had been created as subsequent equitable mortgage for sanction of "Transport Loan" by virtue of the Composite Hypothecation Agreement ("Agreement 1"). Page 3 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 03-Oct-2024 19:03:05 (vi) The Petitioner claims that she had neither signed nor pledged the title deeds of her sole residential house for the purpose of availing the MSME loan. II. 3. (i) SUBMISSIONS ON BEHALF OF THE PETITIONER: Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: In due course of her business, the Petitioner entrusted the Opp. Party No. 3 to handle documentation pertaining to banking transaction(s) between the Petitioner and the Opp. Party No. 3. Owing to such consistent mutual trust, built through numerous transactions upon the years, the Petitioner again entrusted the Opp. Party No. 3 with the Agreement 1. In this manner, the signature(s) of the Petitioner were duly obtained by the Opp. Party No. 3 before the detailed information was written into the Agreement 1, i.e., the Petitioner had already signed the Agreement - 1 before any details were filled into the information spaces thereunder. (ii) Thereafter, on verification, the Petitioner came to know that the Opp. Party No. 3 had arbitrarily and unilaterally, after obtaining the signature of the Petitioner had filled fraudulent details in the ’Confirmation of Creation of Second/Subsequent Equitable Mortgage’. Even, the MSME Loan was written off to be a ’Transport Loan’ which has no truthful bearing whatsoever, distorting the essential character of the MSME Loan. Thus, the autonomy of the Petitioner has been reduced to mere formality due to the arbitrary actions of the Opp. Party No. 3 who saw fit to taint the good faith that the Petitioner reposed unto it. Page 4 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 03-Oct-2024 19:03:05 (iii) By withholding the mortgaged title deeds of the Petitioner, inspite of the closure of the Housing Loan, on the pretext of creating charge on the sole Residential House of the Petitioner regarding the MSME Loan, stands contrary to the well-settled position of law. (iv) Also, pursuant to the RBI notification on ’Responsible Lending Conduct- Release of Movable/Immovable Property Documents on Repayment/ Settlement of Personal Loans’ dated 13.09.2023, the Opp. Party No. 3 is obligated to release the mortgaged title deeds of the Petitioner and remove charges registered with any registry within a period of 30 days after full repayment of the loan account. Therefore, due to causing delay in release of the mortgaged title deeds, the Opp. Party No. 3 squarely falls within the purview of the Compensation for delay in release of Immovable Property documents. (v) During a period where economic downturn was in full-swing and the business operations of the Petitioner had been ground to halt, the Petitioner was made aware by the Opp. Party No. 3 that her sole Residential House has been charged and attached to the MSME Loan. Thereupon, the Petitioner sought to restructure the MSME Loan and on 18.02.2022, the Petitioner submitted application with appropriate rationale(s) regarding the same to the Opp. Party No. 3. However, till date, the request for restructuring the MSME Loan remains unaddressed by the Opp. Party No. 3 whose conduct has become synonymous with that of a recovery agent rather than a banking institution bearing pan-India presence across India. Page 5 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 03-Oct-2024 19:03:05 (vi) The Opp. Party No. 3 has treated the Petitioner with disregard despite the consistently stellar CIBIL Score and even misappropriated the funds from the GECL Scheme, resulting in the financial distress of the Petitioner. III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES: 4. (i).
Legal Reasoning
Per contra, learned counsel for the Opposite Parties earnestly made the following submissions in support of his contentions: The writ petition is devoid of merit and is liable to be dismissed/dropped in limine with costs as misconceived in facts and law, in view of the alternative, efficacious remedy being available to the petitioner under section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereinafter referred to as the “SARFAESI Act”) to approach Debts Recovery Tribunal, Cuttack which is functional. (ii). The petitioner is the borrower for sanction of a term loan facility of Rs.30 lakhs sanctioned vide sanction letter dated 20.8.2016 from the Bargarh Branch of Canara Bank. It is pertinent to state that the petitioner had taken another prior housing loan on 24.06.2011 of Rs. 9 lakhs vide letter of sanction dated 24.6.2011 and created equitable mortgage by deposit of title deeds for the aforestated loan at the Canara Bank branch office in Bargarh town by Confirmation of Deposit of Title Deeds dated 29.6.2011. (iii). When the petitioner took the subsequent loan of Rs 30 lakhs sanctioned vide sanction letter dated 20.8.16 from the Bargarh Branch of Canara Page 6 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 03-Oct-2024 19:03:05 Bank, the prior equitable mortgage by deposit of title deeds for the afore stated loan of Rs 9 lakhs was extended by the petitioner to the subsequent loan of Rs 30 lakhs vide Confirmation of Creation of Second/Subsequent Equitable Mortgage dated 20.5.2016. (iv). As the petitioner defaulted in repayment of the loan of Rs 30 lakhs, the bank invoked the provisions of the SARFAESI Act, 2002 by issuing notice under section 13(2) dated 1.8.2022 against the petitioner and the guarantor. (v). This Court, in connected WP(C) No. 8267/24, has already dismissed the said writ petition by order dated 03.05.24 on the ground of alternative remedy which also applies squarely to the present case which should also be dismissed accordingly. (vi). The petitioner has suppressed the vital fact that she had approached the District Consumer Dispute Redressal Commission, Bargarh by filing Consumer Complaint Case No. 31/22 for one of the main reliefs claimed in the present writ petition which has been dismissed denying the said relief by order dated 12.3.2024 though allowing the other relief hence
Decision
the writ petition is to be dismissed for suppression of material facts. (vii). Under section 17(1) of the SARFAESI Act,, the petitioner can ventilate her grievances before the Debt Recovery Tribunal, Cuttack. Hence, in spite of the alternative, efficacious remedy being available to the petitioner as guarantor/mortgagor to approach Debts Recovery Tribunal, Cuttack under section 17(1) of the SARFAESI Act 2002; the petitioner has erroneously invoked jurisdiction of Article 226. Page 7 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 03-Oct-2024 19:03:05 (viii). The petitioner is the borrower for sanction of a term loan facility of Rs 30 lakhs sanctioned vide sanction letter dated 20.8.2016 from the Bargarh Branch of Canara Bank. It is pertinent to state that the petitioner had taken another prior housing loan on 24.6.2011 of Rs 9 lakhs vide letter of sanction dated 24.6.2011 and created equitable mortgage by deposit of title deeds for the aforestated loan at the Canara Bank branch office in Bargarh town by Confirmation of Deposit of Title Deeds dated 29.6.2011. It is humbly submitted that when the petitioner took the subsequent loan of Rs 30 lakhs sanctioned vide sanction letter dated 20.8.2016 from the Bargarh Branch of Canara Bank; the prior equitable mortgage by deposit of title deeds for the afore stated loan of Rs 9 lakhs was extended by the petitioner to the subsequent loan of Rs 30 lakhs vide Confirmation of Creation of Second/Subsequent Equitable Mortgage dated 20.5.2016 by the petitioner. (ix). It is denied that the petitioner never signed the subsequent mortgage by deposit of title deeds nor pledged them as such mortgages was created by the petitioner as security for the subsequent term loan of Rs 30 lakhs sanctioned to her and for default in such loan, the bank has initiated action under the SARFAESI Act, 2002 by issuing the notice under section 13(2) dated 1.8.2022, It is humbly submitted that such alleged disputed facts cannot be decided in a writ petition and the petitioner has an alternative remedy under section 17(1) of the SARFAESI Act, 2002 to approach the Debts Recovery Tribunal Cuttack. Page 8 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 03-Oct-2024 19:03:05 IV. COURT’S REASONING AND ANALYSIS: 5. I have heard counsel for the respective parties and perused material on record. 6. Article 226 of the Constitution of India confers upon the High Courts the power to issue writs for the enforcement of fundamental rights and for any other purpose. However, this extraordinary jurisdiction is not meant to bypass alternate statutory remedies that may be available to the aggrieved party. The general principle of law is that if an effective and adequate alternate remedy exists, the courts should refrain from exercising their writ jurisdiction under Article 226. This rule promotes judicial discipline and respects the framework established by statutes, ensuring that specialized forums, tribunals, or authorities created under law are given the first opportunity to address grievances. 7. This principle becomes even more pertinent when the cases arise under special statutes that provide a comprehensive mechanism for dispute resolution. Special statutes are often designed to address specific issues in a specialized manner, and the legislative intent behind such statutes is to ensure that the specialized tribunals or authorities, with expertise in the subject matter, have primary jurisdiction. In such cases, invoking Article 226 without exhausting the statutory remedy undermines the purpose of these specialized mechanisms. Therefore, unless exceptional circumstances such as violation of natural justice, lack of jurisdiction, or manifest injustice are evident, the High Courts ought not to entertain writ petitions where alternate statutory remedies are available, particularly under special statutes. Page 9 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 03-Oct-2024 19:03:05 8. It must be kept in mind that the discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well defined exceptions as observed in Commissioner of Income Tax and Others v. Chhabil Dass Agarwal,1 as follows: “15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, Titaghur Paper Mills case and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.” 9. In Authorized Officer, State Bank of Travancore v. Mathew KC,2 the Supreme Court delved into the object and being of the SARFAESI Act and held as following: “8. The statement of objects and reasons of the SARFAESI Act states that the banking and financial sector in the country was